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Introducing the Alinean Social Media ROI Calculator
 

Introducing the Alinean Social Media ROI Calculator

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Marketers are investing more and more in social media efforts, with significant 40% or more annual increases predicted by several market research firms over the next year. To validate the significant ...

Marketers are investing more and more in social media efforts, with significant 40% or more annual increases predicted by several market research firms over the next year. To validate the significant spending growth, marketers also understand that you must make an effort to deliver social media results and success, but what investments are required, and how much effort needs to be expended to deliver specific results?

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    Introducing the Alinean Social Media ROI Calculator Introducing the Alinean Social Media ROI Calculator Presentation Transcript

    • TOM PISELLO, CHAIRMAN & FOUNDERBlog: http://blog.alinean.com/Twitter: @tpisellohttp://www.alinean.com http://www.fightfrugalnomics.com Is there an ROI from Social Media Marketing?
    • Agenda1. Need for Social Media Spending and ROI Trends2. How to Measure Social Media Marketing ROI?3. The Alinean Social Media ROI Calculator4. Best Practices to Maximize Social Media ROI © 2011 Alinean, Inc. 2
    • Social Media Spending and ROI Trends http://www.fightfrugalnomics.com © 2011 Alinean, Inc. 3
    • Social Media Spending on RiseSocial Media spending:• Currently 6.4% of digital marketing spending• Increases of 50%+ in 2011?• Growing to 18% of total marketing spend in 5 years?Greater spending = more financial accountability and transparency IDC Digital Social networks Marketing ProgramFrugalnomics - decision makers more Search engine 5.4% Spend Allocations 2010 2010 optimization empowered, skeptical and frugal than 7.6% Display ads ever before 21.0% Company web sitesCFOs taking more control 26.7% Search ads 13.6%• 1/3rd of Marketing departments, budgets Email and oversight marketing 18.6% Digital events 7.1% © 2011 Alinean, Inc. 4
    • Realizing ROI Important to Future Spending• Respondents identified the top digital and social media execution challenge as measurement and ROI‘ - IDC’s 2011 Tech Barometer• 48% “Creating ROI Measurements” as most important focus for 2011• Current measurement efforts are incomplete: – 65% of corporations using only Engagement Data as the top “Those that can effectively measure measurement metric improvements can make the business case, and – mere 22% capturing Product can truly obtain more budget funding.” Revenue, a key element in quantifying value and ROI © 2011 Alinean, Inc. 5
    • How to Measure Social Media Marketing ROI? http://www.fightfrugalnomics.com © 2011 Alinean, Inc. 6
    • What is ROI?ROI the formula ROI = X 100% Example: • Investment = $100,000 • Savings + Incremental Value = $200,000 • ROI = ($200,000 - $100,000) / $100,000 = 100% • For every $ invested, get back original $1 plus extra $1 in benefits © 2011 Alinean, Inc. 7
    • ROI = Making The Case For Change Start with Status QuoMaking the Case for Change Revenue AS IS Business / IT Costs AS ISProject Timeline Initial Year 1 Year 2 Year 3 MICROSOFT CONFIDENTIAL © 2011 Alinean, Inc. 8
    • ROI = Making The Case For Change Simulate Project ImpactMaking the Case for Change Revenue TO BE Incremental Revenue Revenue Benefits AS IS Project Project Gross Investment Value Business/ IT Costs AS IS Cost Savings Costs TO BEProject Timeline Initial Year 1 Year 2 Year 3 MICROSOFT CONFIDENTIAL © 2011 Alinean, Inc. 9
    • Benefits: Turning Engagements into Incremental Value © 2011 Alinean, Inc. 10
    • Value from Prospect Engagement – New Customers New Prospect Benefits Quantifying Value User Responds to Post / Campaign Conversion of Lead to OpportunityMarketing Campaigns Conversion of Opportunity to Customer / Sale Monitor Identifies User as a Potential Prospect Conversion of Lead to OpportunityMarketing Monitoring Conversion of Opportunity to Sale Sales Identifies User as a Potential Prospect Conversion of Lead to OpportunitySales 2.0 Conversion of Opportunity to Sale Cost per lead savings Generate qualified leads via social media vs. other campaignsLead Cost Avoidance © 2011 Alinean, Inc. 11
    • Marketing Campaign Benefits Example Marketing Campaigns Searchers/Readers — converting like a typical website visitor / direct marketing recipient, with a 3% to 5% conversion from a searcher/reader engagement to an opportunity Advocates/Influencers — 100% more likely to convert to qualified lead than a follower, with 10% or more conversion to an opportunity Followers — at least 50% more likely to convert than a less engaged searcher/reader, with an estimated 5- 8% conversion to opportunityEngagement = 10,000 FollowersConversion of Engagement to Opportunity = 5% Conversion * 10,000 Followers = 500 OpportunitiesConversion of Opportunities to Customers = 10% Conversion * 500 Opps = 50 New CustomersAverage annual value per Customer = $1000 Annual Subscription * 50 New Customers = $50,000incremental revenueNet Value = $50,000 Incremental Revenue * 20% Net Margin (COS + variable SG&A)= $10,000Incremental Margin 12 © 2011 Alinean, Inc.
    • Challenges to Quantifying New Prospect / Customer Value New Customers Quantifying Value Challenges User Responds to Post / Campaign Track leads to social marketing campaigns in Conversion of Lead to Opportunity Lead Nurturing Conversion of Opportunity to Customer / Track qualified leads to opportunities in CRMMarketing Campaigns Sale Track opportunities to sales in CRM Monitor Identifies User as Potential Track leads to social marketing campaigns in Prospect Lead Nurturing Conversion of Lead to Opportunity Track qualified leads to opportunities in CRMMarketing Monitoring Conversion of Opportunity to Sale Track opportunities to sales in CRM Sales Identifies User as Potential Prospect Track sales qualified leads to opportunities in Conversion of Lead to Opportunity CRMSales 2.0 Conversion of Opportunity to Sale Track opportunities to sales in CRM Track cost of social media cost per lead Generate leads via social media vs. other Compare costs to reallocated campaigns /Lead Cost Avoidance campaigns spending © 2011 Alinean, Inc. 13
    • Value from Existing Customer Engagements Existing Customers Quantifying ValueReduced Customer Churn Reduced customer turnover / churn Increased duration of relationship with customer Renewal rate increases on annual / recurring subscriptions / servicesIncreased Lifetime Value Increased up-sell / cross-sell rateIncreased Up-Sell / Cross-Sell Increased revenue per customerIncreased Share of Wallet Increased share of walletCustomer Loyalty Campaign CostAvoidance Reduce spending on customer loyalty campaigns © 2011 Alinean, Inc. 14
    • Reducing Customer Churn ExampleCurrent number of customers engaged via social media = 10,000Reduction in customer turnover rate = 15% current turnover * 10%improvement via social media = 1.5% reductionReduction in lost customers per year = 150 customersRevenue loss avoidance per customer loss = $1,000 / customerRevenue loss avoidance per year = $150,000Incremental margin contribution per year = 20% * $150,000 = $30,000 © 2011 Alinean, Inc. 15
    • Challenges to Quantifying Existing Customer Value Existing Customers Quantifying Value Challenges Measuring current customer turnover / churn Measuring satisfaction / retention improvements directly to social media campaigns / monitoringReduced Customer Churn Reduced customer turnover / churn Percentage improvement in turnover / churn rate Increased duration of relationship with customer Tracking duration of customer relationship / annual Renewal rate increases on annual / recurring subscription renewal rates subscriptions / services Measuring incremental duration of relationships /Increased Lifetime Value renewal rates Tracking baseline revenue per customer and current customer up-sell / cross-sell rates Increased up-sell / cross-sell rate Measuring incremental up-sell / cross-sell / promotionalIncreased Up-Sell / Cross-Sell Increased revenue per customer sales to social media campaigns / monitoring Tracking current share of wallet Measuring competitive wins to social media effortsIncreased Share of Wallet Increased share of wallet Tying share of wallet increases to social media efforts Track cost of social media customer loyalty campaigns Current customer loyalty campaign spendingCustomer Loyalty Campaign Cost Savings from existing campaigns compared to socialAvoidance Reduce spending on customer loyalty campaigns media © 2011 Alinean, Inc. 16
    • Value from Collaborative Innovation Collaborative Innovation Quantifying Value Challenges Measure current market research spending Savings from current / traditional market Tally investment in market research via social mediaReduced Market Research Cost research spending Quantify difference from current spending Savings from product suggestions Savings from supplier suggestions Tracking related social media suggestionsProduct / Operational Cost Savings from distribution suggestions Quantifying specific cost reductions to collaborativeSavings Suggestions Savings from process improvement suggestions suggestions Savings from marketing campaign suggestions / crowd-sourcing Tracking related social media suggestions Savings from sales strategy suggestions / Quantifying specific cost reductions to collaborative recommendations suggestionsSales & Marketing Efficiency and Improvements in sales & marketing effectiveness Quantifying specific sales & marketing effectivenessEffectiveness Improvements from recommendations improvements to collaborative suggestions Tracking related social media suggestions Measure time to market / velocity improvements from suggestions Time to market / velocity savings from Quantify the value to incremental revenue / reducedAccelerated Time to Market suggestions cost © 2011 Alinean, Inc. 17
    • Social Media Marketing Investments• Setup Labor & Services• Content Marketing Labor & Services• Campaign Management Labor & Services• Monitoring and Collaboration Labor & Services• Tools• Integration Labor & Services © 2011 Alinean, Inc. 18
    • Social Media Value Map © 2011 Alinean, Inc. 19
    • The Alinean Social Media ROI Calculator http://www.fightfrugalnomics.com © 2011 Alinean, Inc. 20
    • Alinean Social Media Marketing ROI Calculator © 2011 Alinean, Inc. 21
    • Organization Profile © 2011 Alinean, Inc. 22
    • Social Media Engagement Profile © 2011 Alinean, Inc. 23
    • Social Media Value Map and ROI © 2011 Alinean, Inc. 24
    • Graphs and Assumptions © 2011 Alinean, Inc. 25
    • Value of Follower Details © 2011 Alinean, Inc. 26
    • Review and Edit Key Assumptions © 2011 Alinean, Inc. 27
    • ROI Analysis Report © 2011 Alinean, Inc. 28
    • Social Media ROI Best Practices http://www.fightfrugalnomics.com © 2011 Alinean, Inc. 29
    • Social Media ROI – Engagement Effort and Success• Most Engagement • Least Engagement Success Success – High Technology – Energy – Consumer Products – Utilities – Retail – Wholesale & Distribution – Travel – Pharmaceuticals – Media and Entertainment – Healthcare – Hospitality – Chemicals – Automotive – Professional Services / Service Providers600 Total Firms: Representative sample of Fortune 500, small and medium firms across 32 different industries © 2011 Alinean, Inc. 30
    • Engagement Success• Important and timely content marketing• An interactive dialogue with an active and engaged user base• Special deals, discounts, contests and giveaways to promote, targeting frugal buyers (both business and consumer)• A strong and passionate “lifestyle” brand connection to its user base• A natural demographic alignment with social media participants. © 2011 Alinean, Inc. 31
    • Engagement Success = Social Media Hierarchy of Needs™ © 2011 Alinean, Inc. 32
    • Tier 1: Content Marketing Provide content to facilitate the buying lifecycle• Ideas• Value Loosening of the Status Quo• Credibility Discovery Committing to• Personalization Change• Entertainment Exploring Possible Solutions Consideration Committing to a Solution Justifying the Decision Decision Making the Selection © 2011 Alinean, Inc. 33
    • Tier 2: Campaigns• Coordinated communications to connect to and engage new prospects or existing customers via social media channels.• Some campaign examples can include: – Facebook fan contests to attract new fans – Scheduled tweets to promote a webinar – Research summary tweets to promote white papers – Syndication of a blog post to LinkedIn Groups to gain new connections and spur discussions• The most successful campaigns: – Have a content foundation – Drive interaction (give and take) vs. pure promotion (push) – Are more credible, often involving the voice of advocates, experts and/ or third party validation – Provide unique value to users, such as delivering special offers, exclusive events, or important content © 2011 Alinean, Inc. 34
    • Tier 3: Monitoring• Actively listening by marketing and sales to social media channels to gain and engage additional prospects or customers.• The monitoring can include: – Answering questions or queries about the company or products – Assuring that campaigns are achieving the expected goals, driving the right responses, reactions and results – Gaining additional followers, connections and fans by tracking advocates and advocate reach – Monitoring for positive sentiment and use for promotion to gain additional followers – Monitoring for incidents / issues and negative sentiment to help mitigate these issues and limit risks – Monitoring for competitive mentions or requests, engaging users who might be considering competitive solutions – Providing feedback to fine tune campaigns and content to meet user needs• Monitoring and Engagement Console essential for group success © 2011 Alinean, Inc. 35
    • Tier 4: Collaboration• Collaborative Innovation- Creating and participating in a dialogue with prospects and customers to gain feedback and innovative ideas• As opposed to the “push” oriented focus of traditional campaigns or the “pull” orientation of monitoring, collaboration is an interactive dialogue.• Collaborative Innovation can include: – Market Research – Product Improvements, termed “Social Sigma” by Forrester, such as market opportunity, features and benefits, design, pricing and more – Marketing Improvements, such as slogan testing, campaign and promotional ideas – Business Development, such as advice on go-to-market, channel or strategic partners – Advisory Advice, such as seeking and gathering advice on operational improvements, and suppliers © 2011 Alinean, Inc. 36
    • Measurement and Integration• Measurement – Conversation and Activity History / Archive – Engagement Activity and Demographics – Influence Measurement – Lead and Transaction Tracking – Tangible Benefits Quantification – ROI• Integration – Campaign Management – Content Management – Lead nurturing – CRM © 2011 Alinean, Inc. 37
    • Next Steps• Social Media ROI Resource Center – http://www.alinean.com/socialmediaroi • Social Media ROI Calculator • Research White Papers http://www.fightfrugalnomics.com © 2011 Alinean, Inc. 38